Delaware State Overview

State Facts

Analysis

Delaware scores well in the freedom index almost exclusively because of its regulatory policy score, as its fiscal policy and personal freedom scores are almost precisely average.

Its score is average on fiscal policy overall, but state and local debt has been mounting significantly, rising from 18.3 percent to 22.0 percent of personal income between FY 2006 and FY 2010. Government consumption and subsidies rose from 11.3 percent of income in 2000 to 13.6 percent in 2010. Even for its size, Delaware is fiscally centralized, and local governments are heavily dependent on grants. The tax burden is 9.4 percent of personal income.

On regulatory policy, Delaware stands out for a relatively light hand on health insurance, including one of the most parsimonious health insurance mandates regimes (adding just 23.7 percent to the cost of a no-mandate policy). Delaware has long had the best court system in the country. While the state lacks
a right-to-work law, the other labor laws score average or better. Eminent domain has been reformed, and economic assessments are required for regulatory takings of real property rights. The regulatory policies the state could stand most to improve are local zoning, the extent of occupational licensing, cable and telecom regulation, life and property/casualty insurance regulations, and its hospital certificate-of-need (CON) law.

For a left-leaning, highly urban state, Delaware surprisingly scores about average on gun control, and with the legalization of medical marijuana, improved in that category between 2009 and 2011. Incarceration and victimless crimes arrest rates are generally
slightly below average. Delaware is one of five states with a statewide ban on all personal fireworks, it bans raw milk completely, and it has adopted one of the very strictest smoking bans in the United States. Its asset forfeiture laws rank among the worst in the country, allowing police to seize property based on mere probable cause; placing the burden of proving innocence on the owner, not the government; and giving all forfeiture proceeds to law enforcement, providing obvious incentives for abuse. In 2011, same-sex civil unions were legalized, after the closing date on our study.

Policy Recommendations

Reduce government spending and debt, particularly by cutting aid to local schools (and education spending more generally, which is well above the national average), general administration costs, and public welfare.

Comprehensively reform insurance by abolishing rate filing requirements for personal auto and homeowners’ insurance, and join the Interstate Insurance Product Regulation Compact. These reforms would have easily vaulted Delaware into first place on regulatory freedom.

Reform asset forfeiture comprehensively to place the burden of proof on the government, redirect forfeiture proceeds to the general fund, and prohibit equitable sharing with the Department of Justice (which facilitates an end-run around state law).